When David Dodge announced his retirement as Bank of Canada governor early in 2007, Bloomberg News asked its followers in the financial community to name the likely replacement.
Thirty-six economists participated in the survey; the runaway choice was Paul Jenkins, the bank’s senior deputy governor. Only three predicted the next leader of Canada’s central bank would be Mark Carney.
No one is underestimating him now.
Mr. Carney is assured a place in history after George Osborne, the British Chancellor of the Exchequer, named him the next governor of the Bank of England, starting July 1. Instantly, the 47-year-old from Fort Smith, NWT, was catapulted into one of the most powerful positions in global finance – with all of the scrutiny that comes with it.
The British central bank has invited outsiders to serve on its policy committee, but never has a non-native run the 318-year-old institution. If things go well, his five-year term at the Bank of England could put him on the very short list of Canadians who have left a lasting mark on the affairs of another nation, joining the likes of Lord Beaverbrook and Norman Bethune.
The economy Mr. Carney will oversee in seven months currently is on the verge of recession; the banks he will be charged with regulating are crippled, and need billions of new capital; and the financial centre he will inhabit is marred by scandal. “He is quite simply the best, most experienced and most qualified person in the world to do the job,” the Chancellor said.
Mr. Osborne apparently isn’t a believer in the political mantra of promising low and delivering high. However, he hardly was the only one showering Mr. Carney in glory this week. Newspapers characterized him as Canada’s economic saviour. David Rosenberg, chief economist at Toronto-based Gluskin Sheff + Associates, likened his London move to the trade of Wayne Gretzky from Edmonton to Los Angeles. Scott Brison, the Liberal finance critic, said he could think of nothing at which Mr. Carney would not excel.
With expectations for Mr. Carney in the stratosphere, it will be fascinating to watch the next chapter. Will he return to home as the heroic rescuer of the British economy? Or will he shrink to the status of mere mortal, fading to the back pages of the business section, where he once said central bankers properly belong? It will take years to find out. But his decision to leave the Bank of Canada with 26 months left in his mandate makes it possible to begin an assessment of his legacy as a public servant in Ottawa.
Few have made a greater impact in so short a time. From his arrival as a deputy governor at the Bank of Canada in 2003 to now, Mr. Carney has been at the centre of most every significant policy decision taken by the central bank or the Finance Department, where he served as a high-ranking deputy minister from 2004 to 2007.
It’s a tenure marked by a massive round of personal and corporate tax cuts, a resurgent dollar, the rise of the BRIC group of emerging-market economies, the most severe financial calamity since the Great Depression and a marked rise in consumer debt to record – some say dangerous – levels.
Mr. Carney faced none of these things alone, and inevitably, the hyperbolic praise that has accompanied his appointment to the Bank of England has also produced a note of skepticism in some quarters – prompting the question, does he really deserve all that credit? Other than being quick to slash interest rates at the onset of the financial crisis, “all he did was mimic the Fed, minus the desperate measures that weren’t applicable to Canada,” said one well-known economist, who offered that comment on condition of anonymity.
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